NEW YORK (AP) — Shoppers spent a bit more in early November, raising retailers' spirits about the holiday season right before it kicks into high gear.
Early discounting on everything from TVs and sweaters as well as free shipping deals helped pull in shoppers in the first two weeks of November. Consumers coming out of their shells could be a gift for an economy that has suffered from depressed spending for almost three years.
Spending on clothing, boots and luxury goods showed strong increases from the same time a year ago, according to MasterCard Advisors' SpendingPulse, which includes transactions in all forms including cash.
Deep discounting on flat-panel TVs because of a glut brought shoppers into stores to buy but kept spending on electronics about flat with a year ago. Home furnishings sales were dragged lower by the struggling housing market.
Online, the average order value was about $198, up more than 10 percent from last year, but the number of items put in electronic shopping carts — an average of six — was the same. That means shoppers are buying more expensive items, according to John Squire, chief strategy officer at Coremetrics, which tracks online shopping.
Another reason for merchants to feel better? Jewelry sales, which typically heat up only in the last 10 days before Christmas but have been depressed since the Great Recession, have been sparkling.
SpendingPulse data showed jewelry had solid gains. And Coremetrics data shows that jewelry sales for Nov. 1-18 spiked 30 percent compared with all of November of 2009. While the soaring price of gold may be one factor, analysts say the improving sales indicate shoppers are willing to spend again on luxuries.
"The discounts are having more traction" than last year, BMO Capital Markets John D. Morris said. "Last year, the consumer was more distracted by the larger picture of the economy. They just weren't in the mood. This year, it still takes the promotion, and the consumer is still deal-driven, but they seem to be less distracted and more in the mood."
Still, the big question is whether this momentum will continue or will just siphon away sales from Black Friday and the rest of the season.
Some analysts are more optimistic than others. ShopperTrak, a research firm that tracks sales and traffic at more than 70,000 outlets, last week raised its holiday growth forecast to 3.2 percent from 2.9 percent. That compares with a 0.4 percent decline in 2009, according to ShopperTrak's calculations.
But Laura Gurski, retail practice leader at A.T. Kearney, remains cautious, citing an unemployment rate that's stuck at almost 10 percent.
"I think this is going to dilute Black Friday sales," Gurski said. "I don't think our economy is at the point that these early sales will create additional demand. I think what consumers will buy will be fixed."
Regardless, merchants are in a better place than they were a year ago, when the early discounts failed to pull in shoppers.
The arrival of cold weather this month after a unseasonably warm September and October has helped ignite sales of coats and other winter items. J.C. Penney and Target executives told investors that November got off to a solid start.
Morris believes that stores are coming up with more creative promotions that resonate better with shoppers. More retailers, including Amazon.com, started to offer discounts on holiday items around Halloween weekend compared with last year, and Best Buy began airing holiday commercials two weeks earlier than last year. Stores including Home Depot and Sears Holdings Corp. were also slapping "Black Friday" labels on sales.
Morris said the volume and level of discounts was up 5 percent over last year at the mall clothing chains he follows, but discounting isn't "out of control or desperate."
Overall, merchants are being more creative, including using "flash sales" — online discounts lasting only a few hours, which create an urgency to buy.
"It's not the same old, same old," Morris said.
Online, the bevy of free shipping deals has also worked to pull shoppers to buy. Walmart.com is offering free shipping on nearly 60,000 items with no minimum purchase. Target announced its most aggressive free-shipping offer ever, which covers 800,000 items when shoppers spend $50 or more.
In an interview with The Associated Press, Steve Nave, senior vice president and general manager of Walmart.com, said response to free shipping has exceeded expectations. Nave said holiday sales increases online will far exceed the 16 percent growth estimate for the broader online sector that Forrester Research predicted.
Copyright 2010 The Associated Press.
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